The rise of the new Soviet Union

Whoever said life happens when you aren’t paying attention was absolutely correct. Consider the rise of Russia. While the U.S. is mired in numerous domestic and global challenges, our friends in Moscow, most specifically Vladimir Putin, have been strategizing how to bring Mother Russia back to her former vaunted self on the world stage. And the biggest mistake we can make is to consider Russia as the bumbling former evil empire – long on military but short on finesse and led by oafish party hacks.

As of this writing, Russia is a major player in South America and Cuba; a growing player in Africa, Indonesia and the Pacific Rim; a significant shareholder in the U.S. (between China and Russia they own a bunch of our financial instruments); patron or patriarch in Iran and the Middle East; power broker in parts of Europe, Eurasia and, most masterful of all feats if they can pull it off – being wooed as partner, if not member, of NATO by NATO! Ever feel like you are in the looking glass? You have to admit that Russia, through Vladimir Putin, has accomplished a fair amount since the dismantling of the USSR – an event he likens to one of the worst disasters in history and something he has sworn to reverse. He sounds like a man on a mission. We would be well not to underestimate him, although it will require a lot of savvy on the U.S. and West to counter him. It’s not looking good right now for the good guys.

Ironically, consider that Russia has taken pages from our playbook. After the end of the Cold War, the U.S. reached out to the former satellites. The U.S. tried to assist their economies, aided in the reconciliation of the poorer Europe with the wealthier Western Europe. And then took our eye off the ball. There was some new sign of life in our foreign policy when the U.S. tried to counter the influence of Russia in the gas pipeline wars. We led the way doing business in Russia’s back yard – and other adversaries’ back yards. But now we seem to be losing that influence. Influence, commerce and national security go hand in hand. This is a bad time to develop amnesia.

Some will quickly jump in and assert the tired old stereotype that Russia is grey, poor and ineffectual, suffering from a collapsing economy under the weight of corruption and vulnerable to the same financial markets as other capital intensive countries. Nyet! Even with a teetering global economy, we should not make the mistake of thinking it will
derail the folks in the Kremlin. Why? Simple: Russia has something much of the world needs and therein rests one of her greatest protections – ENERGY! And President/Prime Minister Putin has deftly led both Gazprom and his nation from distant second former super power to major global player. Gas and oil are the lifeblood of global commerce: combining those two resources makes Russia the top gun in energy exports.

Unlike other world leaders, Vladimir paid attention and learned from the victories and mistakes of others. For example – the US and much of the world pays homage to the likes of OPEC for the most practical of reasons – they have oil and the world, especially the US and Chinese economies run on petroleum. Until someone can find a cost effective and plentiful alternative to fossil fuels for medicines, synthetics, and energy we will all be held hostage to the energy nations of which we are not the prime player (although we could become one if we’d go into the Arctic and claim our rightful portion, as I’ve suggested in the past).

Some will even argue what’s the big deal, the U.S. can’t be the only nation exerting influence in the world, as if competition is always a good thing. Sometimes it is, as we saw Massachusetts where Scott Brown won the election in what has become a one-party state, demonstrating that competing ideas can be healthy. But Russia is not Scott Brown! And while it can be argued that the U.S. has sometimes backed the wrong folks and for the wrong reasons in a number of banana republics, overall the good we have done exceeds the missteps. When in our collective memories can we remember cutting off the heat to schools or using children as pawns to exert influence and instill a sense of fear? Or invading a peaceful nation without provocation? Yes the U.S. invaded Iraq, but it was not a sneak attack and it was not without a coalition of other nations. Yet Russia and her leaders have made no secret that they will use the carrot or the stick to their advantage. Georgia is certainly not Iraq or Afghanistan.

At one time our strategy was smart: we went after the former USSR satellite nations and critical crossroads countries. But like so many of our efforts, we got distracted. Or perhaps, as befitting our national character of entrepreneurs, we enjoyed the hunt more than the capture. Unfortunately, as Dr. Johnson once opined centuries ago, “Friendships must be kept in constant repair.” We seem to have forgotten that one and are watching our influence slip through our fingers.

While the devastation of Haiti was playing out, a few events went relatively unnoticed over the last couple weeks that warrant some attention.

First was the anniversary of Russia turning off the heat to the Ukraine, which sent a chill…figuratively and literally…through Europe. If New England can be described as a region with two seasons – summer and winter – such can be said about much of Eastern Europe, prime customers of Russian energy. In early January 2009, Russia/Gazprom (terms used interchangeably) shut off gas supplies going through the Ukraine to Europe. In spite of our (U.S.-led coalition) best efforts to try and counter the Russian/Gazprom juggernaut and its pipeline projects into Europe, the reality is that approximately 75 percent of the Russian gas that transits to Europe is shipped through pipelines crossing the Ukraine. While other pipelines run through Belarus and Turkey, the Ukraine is the linchpin. And therein rests one of the most strategic and fundamental values in the global tug of war between the U.S. and Russia for influence in Europe. The Ukraine is symbolically important – the Orange revolution was supposed to tap into the West and offer untold benefit to the nation. Such did not happen and the country slowly but surely was courted by Moscow as if the failures of Yuschenko, who leaned towards the U.S., became a vindication of Russia.

And how did Moscow play a power game? By letting the victims of their efforts huddle together or find other ways to heat their homes and schools in the dead of winter. This was not a price dispute as Putin and Putin Lite (Medvedev) would have us believe. It was a brutal “shot across the bow” to remind Europe not to mess with Moscow. And it worked! From NATO to Kiev, you will notice a warming effect towards Russia. Recent round one of the Ukraine elections saw two Russia leaning candidates vying for the presidency: Viktor Yanukovich and Prime Minister Yulia Tymoshenko. Neither shared Yuschenko’s affinity for the West. Now to be sure, neither if they are smart will jump too far too fast towards the Kremlin without at least keeping one eye on Washington; playing both ends against the middle is not a bad strategy when you realize your nation is “the prize” for rival super powers – symbolically and practically. If the Ukraine lands in the Russian alliance it will be a major coup for Putin and another validation of his strategy of pseudo-annexation or recreation of the former USSR through alliances based upon energy, weapons, the politics of jealousy, the implied promise of protection. The U.S. needs to stay very involved in Ukraine, Hungary and Bulgaria. All three still have a need for what the West has to offer and folks at the street level can still become a powerful force – but not if they are cold and hungry.

An impressive list of allies and potential allies warm themselves on a Russian gas fire: Bulgaria, Croatia, the Czech Republic, Greece, Italy, Macedonia, Romania, Serbia, Slovakia, Slovenia and Turkey. Austria, France, Germany, Hungary and Poland fared a little bit better, as they only had some of their supplies cut. The message from Moscow was not subtle but it was effective! Quelle surprise – Moscow won. That was in 2009. In 2010, their strategic and tactical efforts continue to pay off handsomely.

Secondly, Russia has just completed a test flight on their new stealth fighter, the Sukhoi T 50. Why does a country that decries cold war mentality build a cold war weapon? For one thing, it is a commercially viable commodity. India and several other nations will want to participate in and/or acquire some. It is likely when the Russian T 50 is fully developed – Putin suggests 2015, which means in a couple years or less in Moscow speak – quite a few customers will be waiting. To be sure, some military experts think it is all smoke and mirrors while others suggest it is a giant leap forward for Russia. Historically, the former might be correct – Russia’s best weapons or certainly most beloved, and the AK 47 immediately comes to mind – have been simple, rugged and low maintenance. The T 50 like other advanced weapons requiring complicated integrated components which means subcontractors, have been plagued with problems and delays. But their resolve alone should be cautionary.

To be fair, there are some in Russia who wonder why build a weapon for which there is no conflict or adversary. That is naïve in that as long as one super power exists the other will or should always be wary and prepared, if for no other reason than to keep each side honest.

There’s a brilliant deceptiveness about all the public denunciations by Moscow about the cold war mentality of the West, and the need to put behind old rivalries for the sake of the world and the need for Russia and NATO to unite against the new threat – terrorism. If Moscow considers the Cold War so yesterday, then why is it building weapons that are designed to counter those of the US? If terrorism is the threat, why the advanced tank, advanced interceptor missiles, advanced ballistic missiles, advanced stealth fighters, planning a new nuclear fleet including submarines and super carriers?

“All warfare is based upon deception.” –Sun Tzu – The Art of War

Never let what you see dissuade you from what you believe. The Russian “let’s turn our swords into ploughshares and put our prior differences in the past” sound bites are working. NATO has Russia right where Moscow wants them! It is almost palpable, Pavlovian, how much some of the NATO leaders want to sing Kumbaya with Russia. Wasn’t NATO created to counter the Russian threat? I could be wrong. But the world, especially NATO would do well to read about the Trojan Horse. Welcoming Russia into the inner circle of NATO, is a dangerous move. We have been lulled into thinking Russia wants to help “us” in the global war on terror. Considering it might be argued Russia is behind some of the evils going on in the world – as patron, educator, enabler, financier, armorer or provocateur – it would also be foolish.

Make no mistake about it – the world is a chess board. Each piece represents a major domain – economics, energy, weapons, methods of disruption, public relations, all overlaid on desired regions to acquire.

“Keep your friends close and your enemies closer.”

The first mistake we make is underestimating the influence of and ignoring the stated objectives or actions by competitive if not adversary nations. Putin has never made it a secret that restoring Russia is his prime motivation. He is a true leader. Although his tactics are a bit rough to say the least, he clearly understands his job as Russia’s CEO – take care of business. And the business of nations is to project influence, protect assets, grow an economy and conduct commerce. Our leaders would do well to remember that.
So let’s look at how Putin is handling those four domains:

Project influence

Russia uses the politics of anti-West, anti-U.S. jealousy very well. They also use energy, money, weapons, friendship or fear to promote alliances. Ask Europe how it feels to be warm. Point made. Or, ask Syria who is helping them rebuild the Port of Tartus, or provides money and technical expertise for their weapons (biological, conventional and were it not for Israel, their nuclear aspirations). Point made. Or, how about Iran and their missile systems, nuclear program, biological and conventional weapons, energy deals, pipelines and other commercial as well as geopolitical influence? Or feeding the anti-U.S. fires in Cuba, Venezuela and other places in South America or the Caribbean. And the U.S. would do well to watch our own back yard – poverty breeds jealousy and dissent – the very foundation that Russia builds alliances upon.

Our leaders should also keep an eye on the poorer nations in the Caribbean, especially those building ties with Russia, Venezuela and Cuba.

Let’s not forget the “CSTO.”

Russia and six ex-satellite nations – former Soviet States – agreed to jointly (translation – Mother Russia rules) create a special military force designed to challenge the influence of NATO. The Collective Security Treaty Organization (CSTO) members Russia, Armenia, Belarus, Kazakhstan, Kyrgyztan, Tajikistan and Uzbekistan have also pledged to deploy their “special forces” units as well as collaboratively contribute to this new military alliance. According to several sources, the scope of the military presence will be significant – the name “rapid reaction unit” notwithstanding. In typical Russia-speak – that is, language designed to deceive – this will not be a SWAT team or even a SEAL team in the U.S. definition of “rapid reaction” force to handle small insurgent attacks, but a force to be reckoned with.

Russia, increasingly sensitive of U.S. and Western influences with their border nations, has expended significant effort and various forms of persuasion – economic, military, energy and political – to reign in or reestablish relations with the “Stan” nations and others critical to creating a buffer zone. Moreover, the members of the CSTO have valuable transit routes for United States interests – supply lines and military bases to support the war effort in Afghanistan, and Russia – pipeline routes for oil and gas. Our pipelines could be vulnerable to “accidents” or sabotage.

Though publicly billed to be able to suppress “terrorist” aggression, Dmitry Medvedev let there be no room to miss the Sicilian message “the military alliance would allow operational reaction to threats and would not be less powerful than NATO forces.” The Armenian president Serzh Sarkisian tried to put a more temporizing tone – “the rapid reaction force is aimed at strengthening the military capacity of our organization.” It sounds good, but Medvedev (heretofore considered “Putin lite”) was letting the world know, “We’re baaaaack!”

Turkey is perhaps one of the most critically important nations to U.S. interests abroad, and we are losing our influence. Historically, the U.S. and Turkey have had reason for common ground and cooperation. Our military bases have been there for years and are strategically a key to our influence in the region. Turkey is geographic crossroads for commerce, military operations and another key energy transit nation. They are a moderate voice in a volatile Islamic region. Turkey is one of the few Muslim nations – secular or not – to recognize Israel.

The Shanghai Cooperation Organization (SCO)

In the aftermath of the Cold War, Russia and China created the SCO – primarily serving as a security cooperative arrangement and provider for the Central Asian region. It has since evolved to become a framework for strategic partnerships. The original members of SCO were Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. This alliance represents 25 percent of the world’s population, a significant supply of oil, gas and other natural resources, as well as significant economic growth potential. Is it surprising that Iran, India, Pakistan, Afghanistan and Mongolia have expressed great interest in joining? Terrorism, separatism and extremism are designated the focus areas for which the SCO was formed. Though not specifically stated in their organizing documents, it is clear the group aims to reduce U.S. influence in resource-rich (as in energy) Central Asia. Not surprisingly, the United States was rejected for membership. The SCO is a challenge to Western interests; an alliance created to counter U.S. influence. Some observers have viewed it as a Warsaw-Pact like organization.

Fortunately for the West, not all is pure harmony in the organization. While Russia would like India to join, China wants Pakistan. Good for us – for the moment. Iran enjoys participation/observer status in the Shanghai Cooperation Organization (SCO)

One of the strategies of the SCO is to create an oil and gas club similar to OPEC – as well as technology and other entities. Being wooed for membership is Turkmenistan, a nation trying to dip a toe in both giants’ camps – the U.S. and the SCO. Recognizing the friendship with Washington on the one hand, yet realizing regional affiliations may be beneficial. Russia (Putin – Gazprom) wants an energy cartel in the Commonwealth of Independent States (CIS) – naturally under its guidance. Turkmenistan could be an important producer. If Putin wants something, it is worth the U.S. to take note.

China also has a strategy.

In the report “Unrestricted Warfare” by Qiao Liang and Wang Xiangsui, two officers in the Chinese military who outline a strategy to undermine a vastly superior super power – the US – offer the following thoughts: “When we suddenly realize that all these non-war actions (using the media, exploiting society trends, economics, cyber threats, political persuasion, financial instruments) may be the new factors constituting future warfare, we have to come up with a new name for this new form of war: warfare which transcends all boundaries and limits, in short: unrestricted warfare. Some might think of it as death by a thousand cuts….or attacking on a variety of targets; soft and hard.” Beijing is following the playbook extremely well. They have a map and are using it. Russia must have gotten a sneak peak!

And the U.S. is doing what to counter this?

Protect assets

Russia considers anything on, through or near its pipelines, or a threat to its interests as either sovereign territory or fair game regardless of the country involved. Georgia received a rude wake-up call in 2008 when the Russian Army invaded it. Just a touch of the stick to remind small neighbors who look toward Washington for friendship that thousands of miles is a long distance for the cavalry to arrive. Whether the threat of calling in the paper Russia holds in U.S. assets, the cyber threat, dangling their influence over Iran, or garnering global outcries against the West when the U.S. or other countries act in a way counter to the benefit of Moscow – nothing is off the table and we would do well to remember that.

Russia is picking up customers across the planet – from Venezuela to Vietnam. Russia is one of the major arms dealers in the world. Want to know what weapons are killing U.S. soldiers in the Middle East? Many have “made in Russia” on them. But the cash that such sales generate is only a fraction of the value being an arms dealer, especially to the rogues and state sponsors of terror affords. It provides access and allows influence. Weapons – low tech and advanced ones are the ultimate commodity to terrorists, insurgents and pirates require and demand.

Grow an economy

Perhaps the sign of a growing economy is the number of Ferrari franchises moving into an area. Let’s call it the Ferrari factor. Would it surprise anyone to learn Russia and China attract the high ticket purveyors from watches to wardrobes to watercraft and other toys for the rich? While the poor always remain poor, they are less poor under Putin than his predecessors. Having natural resources is only one part of the play. Commercializing them and developing the economic infrastructure are critical. Moscow is no longer grey, it glitters – well, parts of it do. And with the creation of a new generation of millionaires is the development of regions worthy of their attention; all these align to regenerate a variety of industries from hospitality and so much more.

Let me be cheeky and suggest that building missiles creates jobs – giving cash for clunkers only recycles a shrinking amount of spendable money. Russia understands this – they drill, baby, drill, they build weapons, and they make or buy things –.not services. Our bailout dollars have not bought the average tax payer much in benefit. And those executives bailed out have made a mockery out of the process. I’m reminded of the cartoon after WWI where a German soldier amputee is begging for change while the aristocrats head over to the restaurant in mink and jewels.

Conduct commerce

It has been said that nations build alliances, not friendships. Mutual interests or shared jealousy only go so far – it still is a supply and demand world. And much of the developing world increasingly demands weapons. Weapons are something Russia supplies very, very well. The U.S., of course, is no rookie in the arms industry but we would do well to keep an eye on the nation customers of Moscow’s military industrial complex – where weapons go, so grows influence. “Money makes the world go round” was a song often sung to emphasize the economic imperative on global events. Putin, Inc also realize their most valuable exports are weapons and energy, as well as technological and cyber expertise, even cold cash to buy things – like South Beach, Brighton Beach, parts of New York City, and the list goes on.

Now let’s look at the U.S. Why should we care what Russia does if we are all one world? Maybe because at the end of the day there are a finite number of people with whom we can do large scale business. Commerce is usually not between adversaries but between allies – allies of convenience if not affinity – and we are being outplayed in the “collect allies” game. Maybe it is because Russia has been following the playbook how to undermine a super power – not being one when Putin ascended, he is now well on his way undermining our interests – perhaps death by a thousand cuts, but nevertheless a concerted effort to counter our influence. We need to turn the table on Moscow, not acquiesce as has been the recent game plan.

With unemployment, outsourcing and a teetering economy, the U.S. needs to increase our commerce. The U.S. needs to build and sell things again. Great nations are only great when they have strong economies, the population enjoys available work that can provide a promising quality of life for the citizenry, build and sell things, have domestic security with the rule of law and the ability to defend against the bad guys before they enter the borders.

If we had to fight WWII today, the U.S. would have to outsource much of the enterprise. This is not a good way to be.

Does the U.S. have a global policy or are we “winging it?” Are we bumbling along much like the giant in Gulliver’s travels? Let’s compare and contrast the strategic moves of Obama’s U.S. and Putin’s Russia. Being obsequious is not a strategy. True there is no reason to be bellicose when diplomacy can be utilized, but there’s also no reason to let our guard down either. While it is more likely that pawns will be used to disrupt our interests – we would do well to follow the ruble and follow the tentacles from Moscow to see where the game is being played.

Consider the reality that we have been outplayed literally across the globe from the North Pole and Arctic, to Central Asia, the Pacific Rim, the Middle East and Mediterranean regions. Since a new administration took over, a variety of disquieting events have taken place, and should give us clear pause to revisit the question: can this administration lead the United States amidst a world of global threats? Will liberal, “one world” ideologies compromise the sovereignty of our national interests worldwide?

But there are simple strategies we can employ, if we have the will.

First – Energy is the name of the game. No nation thrives without it. Throughout contemporary history wars have been fought over resources, not the least of which is petroleum. The U.S. needs to get away from the zero sum mentality, as if drilling for oil in the Arctic is tantamount to killing the planet. We can go green and still redevelop an industry, create jobs, tap into our natural resources. We not only can but we must! It is unlikely the entire enterprise known as the U.S. economy can be transitioned from petroleum based – oil, LNG, coal, gas – to eco-friendly ones overnight. Alternative fuels or technologies and the ability to protect the planet while weaning us off fossil fuels is a worthy goal but currently not practical and likely to fail or at least bankrupt small and midsized businesses. We should work toward those goals of fiscally sound, widely usable alternative energy. But with unemployment rising and a viable area of exploration known to house enough resources to help the U.S. become freer if not completely free of OPEC, we are foolish to squander such an opportunity. The U.S. needs to employ people, build things, become energy independent and even increase our exports. Can you think of a better investment, especially if the U.S. government is going to deficit spend our great grandchildren into debt? Why not put the trillions into an enterprise that, at the end of the day is a new industry? The Arctic is one of the last great frontiers and we own a piece of it. Let’s develop it in an environmentally sound manner – given much of the north central and northeastern U.S. have high unemployment – cold weather acclimated folks might just want a job.

Second – If we want to fight a war on terror, let’s stop the folks who are arming them. One could argue Israel has been more effective at keeping Russia from selling Iran an advanced missile defense system to protect its nuclear program than the U.S. has been. If Russia really cares about fighting that war against terror with the community of nations – then stop helping and arming the rogues.

Third – Get a map and use it. When in doubt, just check the frequent flier destinations of Putin & Company.

Fourth - Stay the course. Good will and aid go a long way when you are there for the long haul, not the short and quick fix. Haiti is a good example of a long term enterprise – and in both humanitarian “feel good” and strategic value having a greater foothold in the region – the U.S. should ensure rebuilding the nation. We need to keep our friends closer than we have.

Conclusion

The last few weeks commemorates events that should serve as cautionary for the U.S. – NATO pushing closer and closer to Russia, Russia reminding Europe that heat is in Moscow’s hands, Putin, Inc is spreading influence in all continents, especially focusing on our back yard and targeting our allies if not friends, and a stealth fighter test flight demonstrating a desire for if not complete capacity to develop advance weapons.

The U.S., like other leaders of the pack, should expect competition and attempts to unseat it as top dog. But are we prepared? Do our leaders even care? Some would argue Russia is only leading the way for what most have been nudged towards in the ultimate stealth war – socialism on a global scale; do our leaders willingly or unwittingly play into this? For the sake of our economy, our sovereignty and our security, I hope not.

It is not too late. We are still a powerful and respected nation. We remain a beacon of hope and a source of inspiration for people the world over. Our nation is looked upon as a rescuer to the oppressed. Just think Haiti. We are generous and compassionate. The first on scene in times of global crisis. But the clock is ticking. We cannot apologize for who we are, nor should we. Greatness is not a flaw. But as Putin has demonstrated so impressively – his leadership has positioned a flawed nation into global leadership. Do we have a leader who can do the same for our nation? Is there one on the horizon? Bush had Rove as his “architect.” Russia has theirs. Who do we have? While we answer that question, we face the rise of a new Soviet Union.

Well, Pretty sure about Mr.Putin's honesty & MAN ON MISSION attitude after he reclaims the presidential position with elections due in coming days.
Nice & diligent article but appears like a inspirational stuff for US people though. Personally i'm fan of Russian tech & Mr.Putin so holding the excitement for the next several years.

Isn't Putin the guy who once said "Whoever doesn't miss the Soviet Union has no heart, but whoever wants it back has no brain"? Apparently western intellectuals haven't lost their cold war hangover, and think that every attempt by Russia to grow in the direction it undertook post USSR is an attempt to become USSR once again.

Seriously, no one sensible is worried about the rise of the Soviet Union. It was disolved because people didn't want it. The CIS is weakening day by day as Russian economic influence remains in decline. The economic crises brought Russian trade with the FSU states to a standstill. They were able to maintain control by having the only outlets for Central Asian fossil fuels but that is quickly changing. Pipelines are going out to China and Europe. Russia is shooting itself in the foot by bypassing Belarus and Ukraine with the Stream pipelines which will lower their hold on them. The CSTO rapid reaction force is basically Russia and Kazahkstan, the rest of the states aren't interested. Trade with the EU has surpassed trade with Russia in most of these states. Russia has been breaking their reliance with military suppliers left over from the USSR which only decreases leverage. They are trying to bring ethnic Russians back into the RF which only lowers their populations outside the RF. Russian dominance is long past.

Small business is the life blood of any succesful economy and it only accounts for 15% in Russia compared to 60% in the EU. Trying to start an SB is so hard no one wants to do it. It takes years to get the permits and then the loans have such a high interest rate you have to turn to European banques. Now the legislation makes even that hard. If you start to become succesful, your competition will take you to court, pay a bribe and force you out of business. The only success is that tied to the state power. Russian economy is still dominated by one industry towns, that is a state run factory at the core of each local economy, and most of those have had to cut wages in half with major layoffs. The roads have turned to dust and the pipes leak most of the water. Russian state is unwilling to invest in infrastructure so they turn to FDI but few are buying unless it is for raw materials. Problem for the people is they don't live near the raw materials. Most of the planes, helos, and cars being bought are foreign. Russian shipbuilding is in shambles. France now runs their automobile industry.

Russia is and will continue to be an energy super power but they are drying up all of their easy to reach fields. After 2015 Russia will have to spend 5-10 times as much to extract what they currently do. By kicking out foreign investors to help pay for this development only makes the investment climate that much worse. With the record loss in profits for both Gazprom and Lukoil the capital needed to develop the fields may just dry up with a lack of profitabilty in extraction costs. FDI has dropped from $70 billion a year to just $15 billion in 2009. At current projections, Russia won't reach its 2008 GDP level until 2013. The crises set them back by 5 years. When China's bubble bursts, Russia will be the hardest hit in the raw materials sector setting them back another 5 years. It will be another lost decade.

The military reforms look good on the surface, but the cuts are far deeper than most people realise. The VVS is looking for total number of aircraft in the 2000 range, this includes everything from fighters, transports, helos and UAVs. UAVs are supposed to make up the largest chunk with 40% of all aircraft. This will reduce the manned systems to 1200. The standing army is reduced to 360,000 with 500,000 in reserve. 20,000 tanks down to 2000 active 6000 in storage. The Navy is by far in the worst shape with problems too numerous to go into here but the ship numbers will be reduced by at least 50% from their 2005 levels. Overall, you are looking at a 40% reduction from pre-reform to post reform. Russia has to build 70% of this equipment over the next 10 years while still maintaining an export balance that is overbooked by $35 billion. Russian MIC is stretched well past its limits and the 15 years of stagnation are starting to show with constant delays. Russia isn't immune to the rising costs of procurement the West is facing, theirs is actually higher. One hidden little factoid the Russian press doesn't reveal when they spout annual delievery numbers is that most of it is just modernised Soviet equipment. The actual number of new machines vs modernised runs only about 25%. Russia considers renovated armour and aircraft as 'new'. The simple fact is that by 2025, the vast majority of Russia's 'new' equipment will be facing retirement yet again.

In conclusion, Russia isn't really rising anywhere. They are fighting to maintain what they have right now and losing the battle.

The problem with Russia right now is the after effects of the disastrous policies of Boris Yeltsin. The other problem is it's declining birth rates. Even the current population is aging. Maybe Russia needs some lessons from the Country which is the Super Power of making babies. lol It's just a matter of time till we surpass china as the most populous country, and that's not a good thing.

Anyway, Russia can Rise again provided they fix those 2 strategic problems. I mean, making babies is not rocket science- lol, and economy is and will recover because of a lot of talent and resources in that country. Also more younger population means more money in economy, naturally. Russians problems are curable, unlike the chronic disadvantage the natural-resources-less countries have. In any case, I'd love to have the Soviet Union back. It may be a Ruthless Martial country, but it's not something we should be worried about. The best way to describe Soviet union is, it is exactly like a Fire. If you are close to it(share borders), it will burn you to a crisp. But if used at arms length intelligently, that same fire can bring you great benefits. India doesn't share borders(which I'm extremely glad of) with it and is very far away... and can be a valuable partner like it was before, while the poor Europeans, Chinese and Japanese will feel the real heat from the Fire. The U.S as always, staying safely in another continent, will use Europe & Japan as it's own playground to play the deadly game of who blinks first in the nuclear showdown with the Soviets.

U.S. recognition of Armenian genocide in Turkey may strengthen ties between Ankara and Moscow / Ukrainian president to maneuver between Europe and Russia - analysts / Russian president orders renewal of 10% of army arsenals in 2010 / Nabucco's future depends on Turkmenistan /
KommersantU.S. recognition of Armenian genocide in Turkey may strengthen ties between Ankara and Moscow
After the U.S. Congress' Foreign Affairs Committee passed last week a draft resolution recognizing the Armenian genocide carried out by Turkish authorities early in the 20th century, Ankara recalled its ambassador from Washington for consultations and announced it could find another energy partner: Russia.
The U.S. Congress had already considered similar resolutions in 1974 and 1985, but did not adopt them. In 2007, the House Foreign Affairs Committee approved the draft resolution. At that time, as now, Ankara lodged a strong protest and recalled its ambassador. President George W. Bush had a difficult time persuading the Congressmen not to vote. This time matters are complicated by the fact that during his election campaign Barack Obama promised to recognize the Armenian genocide and many now expect him to be a man of his word.
The United States historically has a strong Armenian lobby. Its only rival is the Jewish lobby, but following a cooling of relations between Israel and Turkey, their active support for Ankara declined. Washington is also concerned that Turkey's policies are too independent and that it has strengthened its relations with Iran. When, in February of this year, the U.S. proposed that it deploy an anti-missile radar system on Turkish soil, Ankara diplomatically declined, saying it first needed to secure support of the other NATO countries. Nor are the Turks in a hurry to ratify the protocol on the normalization of relations with Armenia, although the U.S. has long urged them to do so.
Meanwhile, Ankara has hinted that it could easily find another energy partner, such as Russia, for example. Sources in the Turkish government say that Turkey "is prepared to open its doors to renewed cooperation with Russia on this issue" if the U.S. persists on the genocide issue.
However, Congress is unlikely to pass a resolution on the Armenian genocide: there is too much at stake. Turkey supports U.S. operations in Afghanistan and Iraq, and Washington is not only interested in the continuation of this cooperation, but also in strengthening it. Equally important is the U.S. base in Incirlik, which is essential for many U.S. air force operations. In addition, Turkey is strategically placed on oil and gas routes from the Middle East and the Caspian region to Western countries.
Rossiiskaya Gazeta, IzvestiaUkrainian president to maneuver between Europe and Russia - analysts
The new Ukrainian President Viktor Yanukovych visited Moscow late last week but his future policy remains a mystery. During his meeting with top Russian leaders Yanukovych mentioned a "new page" in bilateral relations. But the page remains blank.
Alexander Rahr, Director of the Russia and CIS Programs at the German Council on Foreign Policy, says Russia had expected Ukraine to renounce its plans for NATO membership. There was also hope that energy giant Gazprom would be invited to join a new gas consortium and that Kiev would agree to extend the stay of Russia's Black Sea Fleet in Sevastopol after 2017.
"There is still hope that Ukraine will join the Customs Union and the Common Economic Space in the mid-term," Rahr believes.
"Russia expected Kiev to confirm all gas agreements signed with Ukrainian Prime Minister Yulia Tymoshenko. They stipulate that Ukraine is to buy gas at market prices, which is profitable for Russia," the analyst writes.
Ukraine hoped to receive cheap gas and trade preferences. Although Ukraine is a member of the World Trade Organization (WTO), Kiev is unable to sell many of its products on European markets.
Kiev hopes that Russia will not diversify gas transits in circumvention of Ukraine. Yanukovych realizes that he can no longer delay construction of the Nordic Stream gas pipeline, which is to link Russia and Germany via the Baltic Sea, and is going to try to delay the South Stream project, a proposed gas pipeline to transport Russian natural gas to Bulgaria via the Black Sea and further to Italy and Austria. His efforts will be directed at making sure that the biggest share of gas being transported to Europe goes via Ukraine.
Ukraine had extremely pragmatic expectations with regard to Russia, which hoped to resume political reintegration processes with Kiev. Notably, the Ukrainian president visited Brussels before coming to Moscow. The entire Western world welcomed him in Brussels because Ukraine remains an important country which it cannot afford to lose, the analyst writes.
One should expect Yanukovych to implement a policy that would be most beneficial for Ukraine: He is most likely to maneuver between Europe and Russia. Neither Europe, nor Russia has anything to offer Ukraine at the moment to make it contemplate unbalanced cooperation with either party. Yanukovych will try to maintain good relations with everyone, the analyst writes in conclusion.
RBC Daily, GazetaRussian president orders renewal of 10% of army arsenals in 2010
New weapons must account for 70% of Russia's military equipment by 2020, meaning that 9%-11% of armaments is to be renewed each year, President Dmitry Medvedev said at a Defense Ministry meeting.
Analysts say this goal is unrealistic.
"Only 10% of Russia's weapons are new and the rest no longer meet the requirements of modern warfare," said Igor Korotchenko, a member of the Defense Ministry's Public Council. Practice shows that not a single rearmament program in Russia has been implemented in full or on time.
"You can't have a new army without new weapons," the analyst said. "But we have to be realistic about this. It would be good if new weapons accounted for up to 50%."
"The country's defense industry was seriously weakened after both exports and supplies to the armed forces collapsed, and coordination across the sector deteriorated in the 1990s," said Leonid Ivashov, president of the Russian Academy of Geopolitical Problems.
"Unfortunately, modern military equipment is not reaching the armed forces," he said. "Take the 4+ generation MiG-29 SMT, the Su-37 fighter plane with a forward-swept wing, or the world famous helicopters Ka-50 Black Shark and Ka-52 Alligator. None have been supplied to the armed forces, and I'm afraid the same fate will befall the Sukhoi PAK FA fifth generation fighter aircraft."
However, analysts say officials have their own way of boosting the proportion of modern weapons in the armed forces.
"For example, there were some 23,000 tanks and apart from a few hundred, all were obsolete models dating back to the Soviet period," Ivashov said. "The decision was made to cut their number to 2,000, which dramatically increased the proportion of new tanks. The Air Force used the same method. The General Staff call this 'demilitarization'."
KommersantNabucco's future depends on Turkmenistan
The European Commission has approved a 2.3-billion euro economic stimulus program with the largest-ever package of grants for energy infrastructure, including 200 million euros for the Nabucco pipeline project to bring gas from the Caspian Sea to the European Union.
The 2,000-mile pipeline, with an estimated total cost of 8 billion euros ($10.8 billion), should help reduce the EU's reliance on natural gas from Russia. However, allocations have been suspended until the final investment decision is taken on the project.
Nabucco's future now depends on Turkmenistan. If it fails to come to an agreement with the EU within six months, the EU will spend the money on other energy projects.
In spring 2008, Turkmenistan signed a memorandum on the annual delivery of 100 billion cubic meters (3.53 trillion cubic feet) of natural gas to Europe. The European Parliament made unprecedented political concessions by ratifying a trade agreement with Turkmenistan despite the country's deplorable record in human rights. However, that effort has not moved the Nabucco project forward.
The absence of any agreement on the Caspian Sea delimitation between Azerbaijan and Turkmenistan hinders the Trans-Caspian pipeline project, which would supply Turkmen gas to Nabucco. Turkmenistan's Caspian coast is only 200 km (124 miles) away from Azerbaijan's gas transportation system, which is connected to Turkey by the South Caucasus pipeline. But Turkmenistan and Azerbaijan remain unable to solve their territorial dispute.
Turkmenistan is ready to deliver gas to Europe via Iran or Russia bypassing Azerbaijan, according to a government source. One possible route is a new pipeline from the Dovletabad field to Iran with a throughput capacity of 12 billion tons per year (241.64 million bpd). But the United States is unlikely to support this idea; its desire to isolate Iran has in fact deprived Nabucco of much needed gas resources.
The Nabucco project is also suffering from internal problems. For example, Azerbaijan, unable to come to an agreement with Turkey on gas supply and transit terms, has declared its willingness to export its gas to Russia and Iran.
Azerbaijani officials are openly skeptical about Nabucco, and Bulgarian politicians support their view. The project organizers' hope of getting gas from Azerbaijan or Iraq has so far not been formalized. In short, Nabucco still has no resource base.
Last Thursday, the Turkish parliament approved a bill on the construction of the Nabucco pipeline, but the same day the U.S. House of Representatives Foreign Affairs Committee passed a nonbinding resolution calling the World War I-era killing of Armenians genocide.

In yet another bid to strengthen cooperation with the â€œnear abroad,â€ Moscow has hosted informal summit meetings of the major post-Soviet groupings. However, the gatherings also served to highlight continued disagreements between some member states.

On May 8, informal summits of the Collective Security Treaty Organization (CSTO) and the Commonwealth of Independent States (CIS) were held in Moscow to mark the 65th anniversary of defeating Nazi Germany. President, Dmitry Medvedev, told the summit meeting at his Gorki residence outside Moscow, that the CIS remained what he termed as an â€œappropriate platformâ€ for economic coordination and joint modernization efforts (Interfax, ITAR-TASS, RIA Novosti, May 8).

The CIS leaders refrained from any political statements, only adopting an address on the 65th anniversary of the victory in World War II. Yet, they welcomed Ukraineâ€™s President, Viktor Yanukovych, hoping that the country will rejoin the regular meetings of the grouping. The summit meetings in Moscow were attended by the heads of state of almost all the ex-Soviet Republics, except Islam Karimov, who sent the Uzbek Prime Minister, Shavkat Mirziyev, to represent the country. However, Belarusian President, Alyaksandr Lukashenka, and Ukraineâ€™s Yanukovych left early to attend celebrations in their capitals. The Georgian leadership was not invited.

President Medvedev told visiting heads of state that nations should work together in the face of modern threats. In a symbolic non-confrontational gesture, NATO troops marched in the annual Victory Day parade through Red Square on May 9. Ahead of the symbolic parade, the CSTO hailed the recent nuclear arms reduction agreements between Russia and the US, and advocated continued global efforts to pursue nuclear disarmament. Ironically, Russiaâ€™s new military doctrine stipulates the defense of the countryâ€™s allies by all means, including nuclear weapons. According to CSTOâ€™s mandate, if there is a threat of aggression against one country, other member states can provide help, including military aid.

The CSTO heads of state also advocated what they described as a â€œpeaceful returnâ€ to normal political life, prevention of violence and restoration of law and order in Kyrgyzstan. The grouping also pledged â€œhumanitarian and other assistanceâ€ to Kyrgyzstan, but voiced concern about the â€œnon-constitutionalâ€ regime change there in April (Interfax, ITAR-TASS, RIA Novosti, May 8).

The sudden collapse of the Bakiyev regime in Kyrgyzstan also benefitted the Kremlin. Subsequently, Roza Otunbayeva, the head of the Kyrgyz provisional government was allowed to attend the celebrations in Moscow on May 8-9. The Russian-led CSTO has indicated that its Collective Operational Reaction Forces (CORF) would not intervene in any internal unrest in Kyrgyzstan because it was not designed to interfere in such domestic conflicts. The CSTO, which includes Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan, currently has the collective rapid deployment forces (KSBR), due to be replaced by the Russian-led CORF.

In June 2009, CSTO leaders signed an agreement to form the CORF, although some member states abstained. A CSTO summit meeting in Moscow on June 14, 2009 agreed to form the Russian-based CORF to respond to regional security challenges, but Belarus and Uzbekistan declined to sign the agreement. Furthermore, Minsk also refused to assume the CSTO rotating presidency and refrained from the CORF deal due to economic disagreements with Moscow. Subsequently, Russia was forced to assume the CSTO â€œtemporary presidency.â€

In yet another affront to Moscow, Lukashenka granted asylum to Bakiyev and made it clear that any extradition requests would be declined. On April 25, Lukashenka argued that the CSTO â€œhad no prospectsâ€ in its current form, and accused the grouping of turning a blind eye to the Kyrgyz coup (Interfax, April 25).

Last year, Russia's relations with its once closest ally, Belarus, reached a new low following a bitter dispute about Moscowâ€™s restrictions on Belarus food exports into Russia. In May 2009, Lukashenka told his government to end â€œweeping, bowing and beggingâ€ to Russia, and urged them â€œto seek happiness in another part of the planet.â€

Subsequently, Belarus is now planning to receive up to 10 million tons per year in oil supplies from Venezuela, via Ukraine and Lithuania. Possible oil transit issues were discussed during talks between Lukashenka and Yanukovych in Minsk, and Prime Ministers, Andrius Kubilius, and, Sergei Sidorsky, in Vilnius (Interfax, April 29-30). Therefore, economic disagreements between Russia and Belarus continue despite pledges by both nations to form a â€œunion state,â€ and a Customs Union along with Kazakhstan.

In contrast, following Yanukovychâ€™s accession to power, the Kremlin has pushed to rapidly develop ties with Ukraine. These moves include bilateral agreements on gas supplies and the Black Sea Fleet, Moscowâ€™s initiatives to merge Russia's Gazprom and Ukraineâ€™s Naftogaz, and Russian pledges to grant Ukraine preferential loans. Yet, despite the continued disagreements with Belarus, the Kremlin also moved to forge close ties between the three major Slav nations. On May 9, heads of the presidential administrations in Belarus, Russia and Ukraine (Vladimir Makei, Sergei Naryshkin and Sergei Levochkin) met in Sevastopol to discuss an upcoming trilateral summit meeting to be held in the area where the borders of the three nations meet.

Therefore, Russian policies in the â€œnear abroadâ€ apparently continue to revolve around the nexus of post-Soviet groupings and related ideas of closer economic integration. However, it is far from certain whether these policies might serve to solve persistent disagreements between the former Soviet Republics.